Lawmakers Push Bill to Monitor Fed Lending Programs

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The campaign to audit the Federal Reserve I wrote about in July has legs. Two lawmakers this week introduced a bill that would allow the Government Accountability Office to review the agency’s programs for bailing out the financial industry.

“During this financial crisis, Federal Reserve credit contributed greatly to the stabilization of the system,” said Sen. Jeff Merkley, D.-Ore., one of the sponsors of the Federal Reserve Accountability Act, in a statement. “In doing so, the Federal Reserve departed significantly from its traditional relationship with markets and took on unprecedented new risks. Such a significant change in the Federal Reserve’s traditional activities demands responsible, robust oversight.”

Unlike more draconian legislation proposed in the House by Rep. Ron Paul, this measure is more of a nose in the room for those favoring congressional oversight of the Fed. The Texas Republican’s bill would direct the OCC to audit the Fed Board of Governors and its reserve banks and report back to Congress.

Merkley’s bill, which is co-sponsored by Sen. Bob Corker, R-Tenn., only proposes to let Congress sniff around the emergency lending programs. That’s why it has a better chance of advancing than Paul’s measure. While bashing the Fed makes for good sport these days, lawmakers are aware of the risks of politicizing the agency, which sets U.S. monetary policy.

More important, President Obama has the Fed’s back. He has thrown his weight behind the agency as chief overseer to the financial industry and is certain to oppose (behind the scenes) efforts to subject it to congressional scrutiny.

I’m all for checks and balances. That said, can the Senate Banking Committee, on which both Merkley and Corker serve, and other congressional panels be counted on to watch the watcher?

If memory serves, this nation’s lawmakers aren’t exactly immune to the charms of special interests, such as the financial industry. Corker, for instance, has raised more money from financial, insurance and real estate interests than from any other sector (call it occupational hazard — Merkley and Paul haven’t exactly beaten off such donors, either).

Alain Sherter is an award-winning business journalist who has written for The Deal and Thomson Financial Media.

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1

Thoughts

10/23/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

We do not need another "Non-Binding" resolution.

GAO is better than the OCC for Oversight.

The "Real Economy" is sinking because of all the "Big Money Buddies" involved in the money shuffle with "Other Peoples Money".

If "You/They" are connected to "Tax Payer Money" then Full Transparency Should Be A Mandate.

The more you know, the less confidence you will have.
2

The Griffon

10/23/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

you guys are the worst, just another attempt to dumb down the people and water down or neuter Ron Paul's bill HR-1207.
Two more tools not getting re-elected because they sold out their constituents!
bye, bye Corker, Merkley and the banks paying them to dumb down Ron Paul's HR-1207,
Which means a REAL full audit!
Not just counting the cash in the register but actually looking at the books, you tools!!!
Corker and Merkley you are tools and dirtbags, bye, bye!
3

0zzy

10/23/09 | Report as spam

Awesome

Now the Federal Reserve is scared to death of Paul's bill and has successfully lobbied these two punks to try to kill Paul's bill, which has already won automatic passing in the House and 25 Senators.

But somehow, this new bill will be easier to pass. Well guess what, it's also easier for the Federal Reserve to continue it's destructive practices too. This isn't about politicizing the Fed, it's about having accountability. Secrecy does NOT equal independence!
4

Alain Sherter

10/24/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

Yes, suspicion of the Fed runs deep. Do any of you
(or other readers) have any concerns about Congress
gaining control over the Fed? And do you think the
Paul bill strikes the right balance between increasing
transparency at the agency and preserving its
independence?
5

deefburger

10/24/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

What do you mean by "better chance" when the Ron Paul Bill, HR1207 has almost the entire House behind it? Sounds to me like you are pimping the "new" bills that have no TEETH!

Wimp.
6

Alain Sherter

10/25/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

Deefburger--If I'm pimping anything, I want a
raise. I also suggest you read my previous piece on
the Paul bill, which I linked to in this post.

I'm referring to the obstacles the Paul bill faces.
The measure may have considerable support in the
House as a whole, but it's chances of getting out of
House Financial Services are slim so long as the
panel's chairman, Barney Frank, isn't aboard (he's
not, at least publicly). As you may know, committee
chairman have enormous discretion over whether
bills live or die.

The Senate Banking Committee, which has
jurisdiction here, would be an even tougher go.
Chris Dodd is on the record as favoring a plan to
expand the Fed's authority, not curtail it. If that
weren't enough, Obama is a slam dunk to veto the
bill if it ever reached his desk.

So whatever HR 1207's merits, it's a long shot.
7

deefburger

10/26/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

Alain --
You refer to 1207 as "draconian". 1 point for Deef.

"While bashing the Fed makes for good sport these days, lawmakers are aware of the risks of politicizing the agency, which sets U.S. monetary policy." Hmm, sounds like opposition rhetoric. 2 points for Deef.

"only proposes to let Congress sniff around the emergency lending programs." A Congressional Audit is "sniffing"? 3 points for Deef.

Stop being a political shill and then trying to hide it. 1207 has more than a passing chance if the nation's people are vocal and behind it. Your brand of "support" is political nay-saying. Hopelessness in the face of the political machine is what got us in this situation in the first place. Thanks Pal, you are a real Patriot, brave and true, (not).
8

Alain Sherter

10/26/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

Deef--You keep score. I'll keep my eyes on the facts.
Those include that, whatever HR 1207's merits, it faces
a rough road on Capitol Hill.

Your pal,
Alain
9

deefburger

10/26/09 | Report as spam

RE: Lawmakers Push Bill to Monitor Fed Lending Programs

It's not what you see on Capitol Hill that I see as the problem you represent. It's the act of complicity. Go ahead and tell people how a "draconian" measure like 1207 has little chance of success. Go ahead and tell people that these other two toothless bills are "better" because they are more likely to happen. Go ahead and tell us the cold hard "facts" of reality in DC. Go ahead.

Tell us how hopeless our situation is and the best we can hope for is no real change.
Go ahead, Mr. "News" Guy. Tell us again how we have no control in Washington.

You keep score. DC machine vs. Joe Public. Who's gonna win Mr. "Reporter"? Who's the problem? Why?